“The unfortunate scenario is that project financing for clean energy projects hasn’t yet risen to the challenge. Venture capital investment and government funding have been effective at propelling early-stage entrepreneurs, but once a renewable energy company moves beyond the pilot plant stage, venture capital investment alone isn’t enough to support the scaling of commercial projects,” explains Dan Alder, CalCEF president and ACORE board member. “Without mechanisms to appropriately assess and manage multiple risks, and the policy drivers to encourage sustainable late-stage investment, first commercial clean energy projects remain stuck in limbo, without the financing they need to take off and really help solve our energy and climate challenges.”

“From Innovation to Infrastructure: Funding First Commercial Clean Energy Projects” is the third in a series of CalCEF Innovations’ white papers addressing the gaps in the lifecycle of clean energy development. An outgrowth of a CalCEF convening series in November 2009 with more than forty industry participants from the financial, regulatory, and technology sectors, the paper frames first commercial project financing challenges in such a way that obstacles and gaps can be identified with specificity. The paper uncovers targeted policy and market solutions to increase access to finance for new clean energy projects and serves as a framework for industry stakeholders.

Eliot Jamison, CalCEF Innovations’ entrepreneur in residence (EIR), white paper author and principal at Infrastructure Capital Partners, offers perspective as a traditional infrastructure developer and financer, “To engage debt providers and access other sources of project finance, clean technology developers must characterize risk in a way that is familiar to typical infrastructure projects. The industry must take what is generally defined as ‘technology risk’ and break it down into more manageable categories. Once deconstructed, tools and strategies from project finance, insurance services and the policy community can play a collaborative role in overcoming barriers to first commercial project financing.”

The white paper identifies three specific initiatives CalCEF Innovations will pursue to address these shortcomings:

Empower the Clean Energy Deployment Administration (CEDA): Advocate for appropriate design features in pending federal energy legislation to provide CEDA with sufficient authority, resources and flexibility to support developers of early commercial clean energy.

Support Renewables-Enabling State Energy Programs: Work with energy regulators on “emerging renewables” programs that incorporate procurement and financing strategies that specifically meet the needs of technologies in the early commercial stage of development.

Support Innovative Insurance Solutions: Engage with the insurance industry in developing new tools and products that meet the specific needs of clean energy developers and financiers.

According to Tom Hutton, a well known insurance risk adviser and former CEO of Risk Management Solutions, “The lack of underlying performance data for new energy technologies presents a risk to lenders and impedes the financing of these technology companies and projects. Insurance could potentially play a strong role in addressing these issues. The formation of a company that provides underwriters of renewable energy finance and insurance with analytical tools and risk quantification data could reduce the uncertainty of new technology performance, thereby enabling the financing and implementation of clean energy projects. We’re working to provide that solution in the near-term.”

The press conference to discuss the whitepaper findings will be hosted by CalCEF at the ACORE and EuroMoney Energy Events REFF-Wall Street conference, June 30, 2010 at 10:45am EDT. The event will be at the Waldorf Astoria Hotel in the West Foyer.

About CalCEF Innovations

The mission of CalCEF Innovations is to address issues impacting the long-run transformation of the energy system towards sustainability, including the formation of enterprises, the continued flow of capital into technologies and infrastructure, and the design of markets and policy strategies for the sustainable energy transition. CalCEF Innovations leads the California Clean Energy Fund’s development of novel finance, policy, and technology mechanisms to accelerate the growth of clean energy markets through a variety of activities. These include our Entrepreneurs-in-Residence program, academic and industry affiliations such as the UC Davis Energy Efficiency Center, the California CleanTech Open Alumni Program, and our innovation partnerships with university, national and private research labs. Through our ongoing Convening Series and our Annual Conference, CalCEF Innovations also initiates timely conversations across policy, technology and finance that are absent in the evolving debate around cleantech and climate change.